A BUDGET FOR AN ASPRIN NATION

It was more like a budget for an aspirin nation, along the lines of an economic take two aspirin and it will be better in the morning, than a budget for an aspiration nation. The problem is that George Osborne’s Budget brings scant benefit to the Welsh economy and provides clear indication that Con Dem Treasury policies are failing Wales.

The Chancellor’s not unsurprisingly failed to transfer key job-creating powers from Westminster to Wales something that means his Budget will fail to boost demand in the Welsh economy and prevent vital investment in major infrastructure projects.There was a basic failure to accept that Plan A, such as it was, has failed.

It’s time to try something different (Plan B perhaps) and to adopt a range of progressive policies including reversing the tax cut for those earning over £3,000 a week which is still due to be implemented in April 2013. Once again a Westminster Government has failed to cut its cloth to match reality as the pursuit of World Power Status continues with the Trident renewal which is set to cost £100 billion pounds over the lifetime of a new system carries on.

The Chancellor also failed to make progress on introducing a Financial Transaction (the Robin Hood) Tax that would raise £20 billion a year and help curb the speculative behaviour in the financial sector which caused the crash in the first place and the decision to scrap the stamp duty on shares trading is a regressive move as it’s the only thing in the UK currently resembling this tax.

There are some positives such as the announcement on childcare support which is a positive move but even this does not help people on tax credits or universal credit as those on the lowest incomes will still face the greatest barriers to finding work. The scrapping of the planned rise in fuel costs was also a positive, but the opportunity to sort out a longer-term solution with a fuel duty stabiliser to prevent soaring prices at the pump, was missed.

The announcement of the £10,000 tax threshold is also welcome as it will help people on lowers incomes, something that Plaid has long supported. Despite the few positives, ordinary families in Wales are still set to pay the price for the failings of the banks and the self-defeating policies of the Treasury.

Most importantly for Wales, what the Chancellor should have announced is the implementation of the recommendations made by the Silk Commission. This would have ensured that we in Wales have control over the levers that would allow investment in major infrastructure projects, creating jobs and boost demand in the economy.

MAGIC MOMENTS

Prime Minister David Cameron’s criticism of some of the tax arrangements of some of the rich and shameless as "morally wrong" certainly caught the headlines. Perhaps it can be put down (from a Conservative perspective) to the PM going off on one again. it was certainly a bizarre ‘Conservative’ moment - what’s next Japanese whalers endorsing the virtues of Greenpeace? Certainly from where I have been sat, this side of the bridge, ‘Conservative’ and ‘tax evasion’ have been happily juxtaposed for many years in the public perception.

I noticed that David Cameron appears to have rapidly clammed up, after his unexpected outburst. Perhaps he is now engaged in managed withdrawal (aka ‘retreat’) following his condemnation of celebrity tax avoiders yesterday, no doubt after less than coded warnings from Tory donors that his attacks on Jimmy Carr could open a world of tax avoidance related hurt.

After further thought DC may have decided to cut his losses and keep his head down, certainly the PM has declined to criticise the tax affairs of Take That star Gary Barlow (a recent recipient of a gong), happens to possibly involved in a similar tax evasion scheme to the one Carr used to cut his liabilities. No doubt some pretty senior Tories are fearful that Cameron’s comments could lead to an unwelcome media spotlight on the tax affairs of senior party donors and government (and not doubt former New Labour) ministers.

The Daily Telegraph (no great lover of Cameron admittedly) says that DC under mounting pressure to pay back cheap loans of £1.2 million to the Conservative Party from companies registered in tax havens before the last election. One £250,000 loan apparently came from Juniper Trading (which is registered in the British Virgin Islands). It was given in 2004 at 0.25 per cent below the base rate, to be repaid in 2029. Another £950,000 loan was apparently made by the Medlina Foundation, (based in Liechtenstein), at the base rate plus 1 per cent in the same year. Oops!

Now it does seem a bit rich for the Conservative Party to be taking advantage of loans from offshore firms, while the PM slags of celebrities, for using a tax avoidance scheme in Jersey. Most reasonable people accept (by now) that there is a real need to deal on a global basis with the problem of off-shore companies and those individuals who are actively engaged in tax avoidance, tax evasion and / or money laundering. The problem is that the UK is at the heart of the problem as it has consciously chosen not to regulate some of its crown dependencies.

The scale of the off-shore problem takes your breath away. The Cayman Islands; are currently home to some 12,000 corporations and have a population of 50,000, yet are home to 70% of the planets hedge funds. The British Virgin Islands (population 22,000) is home to 823,502 registered companies. General Electric paid no tax in 2010, yet made a $14.2 billion dollar profit. Barclay's has 181 subsidiaries registered in the Cayman Islands and paid little UK tax on its worldwide profits. The Dirty Digger's News Corp has 152 subsidiaries in tax havens across the planet (according to the US Government) and paid no UK corporation tax between 1998 and 1999.

US President Obama was absolutely right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. The US President was spot on, if we actually tackled the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash. I suspect that rhetoric aside hell might have a better chance of freezing over before that nice Mr Cameron and the other 18 millionaires in the cabinet actually do anything to close the tax loopholes – were that to happen then perhaps we would all be in it together?

NOT ON OUR BEHALF...

So David Cameron is to travel to Brussels for a major EU summit on the eurozone debt crisis. Both Germany and France are keen to have a new EU treaty which would include measures to stop a repeat of the problems threatening the euro's future. Cameron is under increasing pressure from the anti-Europe wing of Tory MPs who want him to resist moves to strengthen the power of Brussels over EU members.

The PM has pledged to stand up for Britain, he will display some of the tenacious bulldog spirit, etc. Some old same old you might think, but there is more to this than meets the eye. Not quite, in a joint letter, France's President Nicolas Sarkozy and German Chancellor Angela Merkel have called for the 17 eurozone countries to have common corporation and financial transaction taxes.

This is something Cameron (“the bankers friend”) is obviously set dead against. Cameron has cleverly hidden the real reason, why and on whose behalf he is actually going to the Brussels summit for, by playing the Tory patriotic card, saying he would fight for the UK national interest in any EU Treaty talks.

Cameron's real concern is the issue of corporation tax and the proposed financial transaction tax – something that could seriously hinder the effective money laundering that goes on in the City of London. The last thing Cameron wants is any bright light shone on the questionable financial practices that operate in and around the City of London. Cameron will be busy in Brussels acting on the banker's and the tax evaders behalf not on behalf of the inhabitants of these islands.

Interestingly enough, the previous New Labour government made much of its light financial regulatory touch, at least until the wheels came spectacularly off the wagon. It's a tad difficult for the Con Dems to make anything positive out of their refusal to take any action over banking regulation (at least until 2019). In the wake of the banking collapse and at a time of real financial austerity when we are all supposed to be in it together, this is pretty rich.

There is a real need to deal on a global basis with the problem of off-shore companies and those individuals who are actively engaged in tax avoidance, tax evasion and / or money laundering. The European transaction tax initiative favoured by France and Germany is long overdue and a small step in the right direction.

What a surprise! it turns out that the UK is at the heart of this problem as it has consciously chosen not to regulate some of its crown dependencies. The scale of the off-shore problem can take your breath away. The Cayman Islands; are currently home to some 12,000 corporations and have a population of 50,000, yet are home to 70% of the planets hedge funds.

The British Virgin Islands (population 22,000) is home to 823,502 registered companies. General Electric paid no tax in 2010, yet made a $14.2 billion dollar profit. Barclay's has 181 subsidiaries registered in the Cayman Islands and paid little UK tax on its worldwide profits. The Dirty Digger's News Corp has 152 subsidiaries in tax havens across the planet (according to the US Government) and paid no UK corporation tax between 1998 and 1999.

So much for all being in it together, if developed countries exchequers lose out then it's significantly worse for developing and underdeveloped countries. Tax dodging costs developing countries around $160 billion dollars per year (Christian Aid). Around $ 1.2 trillion dollars was illicitly removed from poor countries in 2008 (US Integrity Research Centre).

President Obama rightly suggested that the governments of the world actually got together to tackle the issue of tax evasion and tax havens. The US President was entirely correct, if we actually tackled the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash.

There again, perhaps if that nice Mr Cameron and the other 18 millionaires in the cabinet were to work with other governments worldwide to close the tax loopholes then perhaps we truly would all be in it together? Perhaps not! So over the next few days when Dave (and no doubt the Daily Mail) makes much of standing up for Britain in the Brussels summit its worth remembering that he is actually there on the bankers behalf not ours.